Independent Contractor Status

On January 10, 2023, the U.S. Department of Labor published the final version of the Independent Contractor rule under the FLSA proposed in October 2022. The rule will take effect on March 11, 2024.

The final rule establishes a six-factor test for determining whether a worker is an employee or independent contractor. The six factors, which are non-exhaustive, include:

• A worker’s opportunity for profit or loss depending on managerial skill
• Investments made by the worker and the potential employer
• The degree of permanence of the work relationship
• The degree of control an employer has over the work
• The extent to which work performed is integral to the employer’s business
• The use of a worker’s skill and initiative

No factor has any predetermined weight and other factors may be relevant. The final rule explains these factors in more detail and can be found  here

The misclassification of employees as independent contractors may deny workers legal protections and result in a violation of the FLSA. The final rule addresses the misclassification of independent contractors by bringing the DOL’s rule in line with the economic realities test developed by courts over decades and providing clarity and consistency for businesses that engage with individuals as they determine a worker’s status under the FLSA.

OSHA Form 300A Requirements & Deadline

Employers who have more than 10 employees AND within an industry that is not partially exempted from the recordkeeping requirements ARE required to complete the OSHA Form 300A. Employers must complete the OSHA Form 300A no later than February 1 of the year following the year covered by the records. This completed Form must be posted between February 1 and April 30 in a visible location, so employees are aware of injuries and illnesses occurring in their establishment.

Employee Classification Rule

In January, the Department of Labor (DOL) Wage and Hour Division introduced a new regulation impacting the classification of workers under the Fair Labor Standards Act (FLSA). Set to take effect on March 11, 2024, this Final Rule presents an updated framework for determining worker status, introducing a more thorough examination that may pose challenges in designating workers as independent contractors for FLSA purposes. It’s important to note that this rule specifically addresses FLSA wage and hour requirements and doesn’t extend to regulations governing retirement or health and welfare benefits, which are typically governed by ERISA and the Internal Revenue Code. However, the changes introduced could potentially result in confusion and potential claims for benefits.

Under the FLSA, employees are entitled to minimum wage, overtime pay, and other benefits, while independent contractors typically enjoy greater flexibility but are not entitled to the same benefits.

The rule establishes a comprehensive six-factor test for assessment:

• Opportunity for profit or loss
• Investments by the worker and employer
• Permanence of the work relationship
• Degree of control
• Extent to which work is integral to the employer’s business
• Worker’s skill and initiative

Although these factors guide the assessment, none carry greater weight, and the list is not exhaustive. The expanded definition under the FLSA may result in more independent contractors being classified as employees. The DOL has provided Fact Sheet 13 to aid in proper worker classification.

The reclassification of workers as employees under the FLSA can have substantial implications, especially regarding employee benefits. In terms of retirement benefits, this shift could lead to an increase in eligible retirement plan participants, impacting employer obligations under plans such as 401(k). Changes in FLSA classification may also influence health benefits, potentially escalating employer obligations under the employer mandate rules. This underscores the importance of careful planning and potential adjustments to existing plans and policies. Furthermore, the new rule may trigger additional reporting requirements for employers, especially if they exceed certain thresholds.

Employers and HR professionals, especially in the gig economy where many workers are currently classified as independent contractors, should be aware of and adapt to these changes. The rule’s focus on a totality-of-the-circumstances analysis for worker classification necessitates careful consideration of various economic factors. Given the potential for ongoing regulatory developments and challenges to the rule, staying informed is crucial for employers to prepare for possible impacts on their operations and worker classifications.

Understanding Health Care Price Transparency

Overview of Healthcare Price Transparency

Healthcare price transparency makes the cost of medical services accessible and clear. Informing consumers clearly allows all of us to make more informed decisions about our healthcare choices. Historically, the pricing methods have been opaque in nature, leaving us bewildered by bills and unaware of the true cost of services.  According to the U.S. Centers for Medicare & Medicaid Services, health plan price transparency helps inform consumers of the cost of a covered item or service before receiving care.

Transparency in Coverage rules have recently been implemented, underscoring the pervasiveness of this concept. Since July 1, 2022, most group health insurance plans and issuers have posted pricing information for covered items and services. As of Jan. 1, 2023, there were further requirements to provide additional access to pricing information and enhance consumers’ ability to shop for the health care that best meets their needs. The final phase of these Transparency in Coverage rules took effect on Jan. 1, 2024.

With price transparency, individuals and employers alike can better understand the disparity in rates for seemingly identical healthcare services. Ultimately, transparency gives employers more pricing leverage when asking healthcare providers and plans to defend their negotiated rates.

Healthcare Price Transparency Advantages

Price transparency holds the promise of reshaping the healthcare landscape into one where informed choices lead to improved outcomes. Delving into the following potential benefits provides a nuanced understanding of how transparency can create a win-win scenario for individuals and employers:

• Cost savings
• Enhanced employee satisfaction
  • More healthcare decisions are in the hands of individual consumers.
• Improved quality of care
  • Informed consumers can weigh the cost and quality of their healthcare services.
  • Price transparency incentivizes providers to compete not only on pricing but also on delivering high-quality care.

Healthcare Price Transparency Challenges

While healthcare price transparency holds promise, acknowledging its disadvantages is crucial for a comprehensive understanding of its implications. Consider the following challenges of implementing healthcare price transparency:

• Data accuracy—Ensuring the accuracy and reliability of pricing information is an ongoing challenge in the healthcare sector. The variation in health care costs, influenced by individual circumstances, makes it imperative to critically evaluate the accuracy of available data. Pursuing real-time, precise information remains a collective effort involving healthcare providers, insurers, and policymakers.
• Complexity of pricing—The intricate nature of health care pricing, influenced by many factors, introduces a layer of complexity that may impede individuals’ ability to decipher and compare costs effectively. The challenge lies in simplifying this complexity without oversimplifying critical nuances.

As the healthcare landscape continues to evolve, the pursuit of transparency remains a dynamic and ongoing endeavor that has the potential to build a more equitable and sustainable future. Contact us for more information at compliance@nulty.com.

Guidance on Coverage for Contraceptives

The Implementation FAQs Part 64 of the Affordable Care Act (ACA), issued on January 22, 2024, offer crucial insights into preventive service coverage, providing guidance for compliance with the law. Developed collaboratively by the Departments of Labor, Health and Human Services, and the Treasury, these FAQs specifically emphasize the requirement for non-grandfathered health plans to cover certain preventive services without cost-sharing. The covered services include recommended immunizations, preventive care spanning from infants to adolescents, and additional preventive care tailored for women. The guidelines permit plans to use reasonable medical management techniques for determining coverage limitations on services not explicitly outlined in the recommendations.

In addition to preventive services, the FAQs delve into the coverage of contraceptives and contraceptive care. They advocate for comprehensive contraceptive care for both adolescent and adult women, encompassing a broad range of FDA-approved contraceptives and family planning practices. Plans and issuers are obligated to cover contraceptive services and products that are medically appropriate, as determined by a patient’s provider. The guidelines also touch upon the use of reasonable medical management techniques within the various contraception categories.

Despite these clarifications, the FAQs acknowledge persistent barriers to accessing contraceptive coverage without cost-sharing. Examples of potentially unreasonable medical management techniques are outlined, including excessive step therapy protocols, age-related restrictions, and cumbersome administrative requirements in exception processes. The Departments stress the importance of establishing an expedient and transparent exceptions process to ensure the coverage of medically necessary contraceptive services and products.

Lastly, the FAQs introduce guidance on a therapeutic equivalence approach that plans and issuers may adopt. This approach, when combined with an accessible and expedient exceptions process, is designed to align with the requirements for contraceptive coverage. Its implementation aims to support the coverage of contraceptive drugs and devices, ultimately enhancing access to contraception without cost-sharing.

Employer Considerations:
Individuals with concerns about their plan’s or issuer’s compliance with contraceptive coverage requirements are encouraged to reach out to the Department of Labor (DOL) through its website or toll-free at 1-866-444-3272.

ACA Reporting Deadlines in 2024

Employers are responsible for filing ACA Form 1095-B/C to report the employees’ health insurance coverage information to the IRS.

It is also mandatory for the employers to file the ACA Forms annually with the IRS and the States and furnish the Form copies to the employees before the deadline to avoid unwanted IRS penalties.

Deadlines:

• March 1st : Recipient Copy Deadline
• April 1st: Electronic Filing Deadline

Late Filing Penalties:

If you miss filing the ACA Forms to the IRS before the deadline, the IRS will penalize you for the late filing.

The ACA penalty for late filing would range from $50-$530 per Form, depending on how late you are submitting the Forms to the IRS, and it keeps increasing each day

Frequently Asked Questions about ACA Reporting Deadline:

Q. What has changed for the 2023 Tax Year?

A. In the month of October, the IRS released a final version of Form 1095-C and Form 1095-B which confirms that the IRS has not added any new changes in both the ACA forms. It looks similar to previous year reporting Forms.

Q. When is the due date for paper filing 2024 ACA Forms 1094 and 1095-B/C?

A. February 28, 2024, is the paper filing deadline for the 2023 Tax Year. IRS mandates electronic filing for those who are reporting more than 10 Forms.

Question of the Month

Q. Should veterans be excluded from the full-time equivalent (FTE) count for determining if an employer is considered an applicable large employer (ALE)?

A. If the veteran employees have Tricare or receive health insurance through the Department of Veterans Affairs, they do not count for purposes of determining whether an employer is an applicable large employer.

How to Create a Mental Health Awareness Strategy

Developing an effective mental wellness strategy is crucial in today’s workplace, as 92 percent of employees value an employer that prioritizes emotional and psychological well-being. Here are a few ideas to start you on your journey.

Make Support Accessible

Demonstrate your commitment to your employees’ overall well-being with immediate and convenient access to mental health support. Examine your disability benefits plan closely to ensure it encompasses mental health. To offer timely support, remove financial barriers, and give easy access, consider enhancing your employee benefits package with supplemental mental health benefits incorporating online therapy services and mindfulness apps.

Communicate Clearly

Communication is vital in making your mental wellness strategy effective. Show your team that mental health is a priority with regular reminders and updates about mental health resources. Encourage utilization and reinforce the company’s commitment to employee well-being with clear communication about the accessibility of mental health coverage in your employee benefits package.

Develop a Culture of Support

Beyond individual benefits, cultivating a supportive workplace culture is fundamental. Employees increasingly seek environments that promote work-life balance, recognize their contributions, and encourage positive interpersonal relationships. Such a culture supports mental health and enhances employee engagement and productivity.

Implementing cultural change involves both top-down leadership involvement and grassroots initiatives. Leadership should lead by example, sharing personal experiences with mental health to destigmatize discussions around the topic. Additionally, creating opportunities for employees to contribute to the conversation around mental wellness fosters a more inclusive and supportive environment.

Remember, the role of middle management is critical in this process. Training managers to listen empathetically and respond without judgment can significantly impact the effectiveness of your mental wellness strategy.

An effective mental wellness strategy combines comprehensive benefits, accessible support, continuous communication, and a culture that actively supports employee well-being. By adopting this multifaceted approach, you can create a workplace that acknowledges the importance of mental health and actively promotes and supports it.